Hinkley Point C will come on line in 2025 and that Sizewell C will be 20% cheaper to build

EDF Energy is confident Hinkley Point C (HPC) will come on line in 2025 and that Sizewell C will be 20% cheaper to build, the company’s new CEO, Simone Rossi, said yesterday in his first major speech since taking over from Vincent de Rivaz at the helm of the UK company in November.

Under a strategic investment agreement signed in October 2016, China General Nuclear (CGN) agreed to take a 33.5% stake in EDF Energy’s Hinkley Point C project in Somerset, as well as jointly develop new nuclear power plants at Sizewell in Suffolk and Bradwell in Essex. The HPC and Sizewell C plants will be based on France’s European Pressurised Reactor (EPR) reactor technology, while the new plant at Bradwell will feature the Hualong One design. The UK EPR successfully completed the Generic Design Assessment with UK regulators in December 2012, while the UK HPR1000 reactor design started this process last year.

In his speech titled ‘New nuclear – responsibilities and opportunities’ at Cannington Court, near the HPC construction site, Rossi said replicating construction techniques from HPC, existing grid connections and the exploration of new finance models meant construction of the planned Sizewell C plant in Suffolk would cost GBP4 billion less.

Schedule

One of the main focuses at the HPC site, Rossi said, is ‘J-zero’ or June 2019 – when construction of the plant’s structures above ground is scheduled to start.

“That can only happen once the foundations are in place for the first unit. All our 2018 goals will help us to achieve this major milestone on schedule by June 2019,” he said. “Beyond J-zero, our goal is to put the first unit into service by the end of 2025. Are we confident that we can deliver by 2025? Yes, we are confident.”

That confidence is based on the “innovative tools” and the lessons from other EPR projects, he said. The detailed 3-D digital model of the plant, for example, “helps teams get more jobs done right first time”.

He added: “It shows the design down to the last light switch. Every engineer can see exactly where each of the 4000 kms of cable and 400 kms of pipe goes and in what order they are laid. Every team has the same plan with them in their hands – not away in an office. It’s already making a big difference and significantly improving delivery of the programme.”

Another example, he said, is working with suppliers “long before” contracts for the project were signed, in 2016. This means they have an “accurate idea of what they need to do and how much it will cost” before they start work, and testing equipment offsite means the quality of parts arriving on site is assured before they are put in place, he said.

Sizewell C

EDF Energy “understands the message” from the British government on cost reduction and the need to be competitive for future nuclear projects, Rossi said. The cost to consumers is made up of construction and financing and there is “potential to significantly reduce both” for Sizewell C, he added.

The key to reducing the construction cost is replication, he said. For example, HPC has eight emergency generators, which had to be designed and certified to meet the standards required for nuclear safety. The first two will cost GBP38 million, but the next six will be half that at GBP19 million each, he noted. At Sizewell, none of that development or certification work will need to be repeated and so all its emergency generators will be at the lower price, he added.

Repeating experience for a power plant that is largely identical to HPC makes a capital cost reduction of 20% possible, he said.

The successful adaptation of the EPR design to meet British regulatory requirements for its use at Hinkley Point C means “tens of thousands of hours” of engineering work does not need to be repeated for Sizewell C, he said.

Sizewell A, which houses two 210 MWe (net) Magnox gas-cooled reactors that started commercial operation in 1966, were permanently shut down in December 2006. Sizewell B is a 1188 MWe pressurised water reactor that began operating in 1995 and is due to shut down around 2035.

Rossi said: “Years ago, the site at Sizewell was built with a grid connection capable of handling a bigger power station – and it is relatively close to where demand is. Sizewell C can benefit from that big advantage with substantial savings in grid connection costs.”

Financing

On financing, Rossi said reducing the cost of capital can “make a significant difference to the price for consumers”.

The final agreements enabling construction of two EPRs at HPC to proceed that the UK government, EDF and CGN signed in September 2016 included the contract-for-difference (CfD) and the Secretary of State Investor Agreement. The CfD – the ratepayer-backed guaranteed price for electricity generated by HPC – was originally agreed in October 2013 and guarantees the plant will get GBP92.50 per MWh for its first 35 years of operation. This strike price for HPC falls to GBP89.50/MWh if a final investment decision is taken on Sizewell C.

Rossi noted that the project’s shareholders “bear all the risk” of building HPC, adding that the National Audit Office has suggested that other models of financing should be considered for the future.

“With government, we should explore alternative financing models that can create the conditions where institutional investors like pension funds can participate when they were not able to before. Sizewell C will be a proven technology, representing the 7th and 8th EPR Units, and the first 4 units will soon be operational in China, France and Finland,” he said. “I am not saying financing will be easy – with the right framework in place, it will be possible.”

Progress at Hinkley

EDF Energy’s parent company, French utility EDF, has said the EPR unit under construction at its Flamanville site in France will be connected to the grid in May 2019 and reach full power in November 2019. EPRs are also under construction at Olkiluoto 3 in Finland and Taishan 1 and 2 in China. Olkiluoto 3 has been under construction since 2005 and has seen several revisions to its start-up date, which is now expected by the end 2018. Taishan 1 in China, which has been under construction since 2009, was expected to start up in the second half of 2017, while Taishan 2 was scheduled to begin operating in the first half of 2018. CGN said in late December, however, that commissioning of unit 1 is now expected this year and unit 2 in 2019.

Rossi noted that, at Hinkley, EDF Energy is building the fifth and sixth reactors of their type.

“It’s one of the largest infrastructure projects in Europe and it will deliver safely for over 60 years. That said, like any major infrastructure project, we know we will face challenges and it is our job to deal with them. We will never compromise on safety and quality. What also matters is our impact on the local economy. Here in Somerset, all the activity on site is making a real difference to the economy and people,” he said.

About 4000 businesses in the south-west region of England are registered to work on HPC and, by 2020, there will be GBP200 million of spending each year in the local economy, he noted.

“Money spent with companies like heavy engineering specialists Blackhill Engineering from Exeter or Somerset Larder which is already providing 65,000 meals a month,” he said. “In November, the Social Mobility Commission highlighted the challenges facing West Somerset in providing opportunities for young and disadvantaged people. I know a lot is being done to tackle that and I am pleased that Hinkley Point C is playing its part,” he added.

The Construction Skills Centre is training a new workforce for HPC and other large projects in the UK, he said.

“Trainees are learning skills in areas like steel-fixing where there is a national shortage. Next month the National Nuclear College is due to open here in Cannington. Without qualified people it wouldn’t be possible to deliver the project. I want to take the opportunity to thank the local businesses, councils and education establishments. Without their support this would not be possible,” he said.

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